Posted October 1st, 1997

Gift Planning Professionals Share Their Thoughts on the New Tax Law

Now that the Taxpayer Relief Act of 1997 is in effect, you may be wondering what it will mean for your donors and, ultimately, how it will affect your organization. Read on for the views of four gift planning professionals. They are Pamela Bennett, director of planned giving for Memorial Sloan-Kettering Cancer Center; Edward John, director of planned giving for the United Way of America; Jack Murphy, senior trust officer and director of planned giving for Cornell University; and Steve Settle, director of development and planned giving for the Society of the Divine Savior. Together they claim over 53 years of combined experience in fund raising and charitable gift planning.

Q. You’ve seen the provisions of the Taxpayer Relief Act of 1997. How do you feel planned gift development will be affected in the coming years?

Bennett: I think there will be improve-ments because of this new law, especially regarding charitable remainder trusts. There will be less opportunity for gifts which don’t have much benefit for a charity with the new 10% remainder provision for CRTs.

John: I believe the new tax law will be a non-event for us. First and foremost, we will continue to focus on the “gift” aspect or charitable intent. Tax changes may affect the ultimate size of the gift or the gift vehicle, but this creates another opportunity to visit our donors.

Murphy: I think initially the law may create some confusion for a period of time, particularly in the capital gain area. But soon this legislation, like the others that preceded it, will simply become part of the general understanding of advisors, planned giving professionals, and donors.

Settle: For us, I doubt that there will be any significant impact as a result of this law. I suspect that many if not most of our donors don’t even itemize, and their primary motive for giving is certainly not tax-related. The tax aspect is only one small part of a gift, just the cherry on top of the sundae, so to speak.

Q. How do you plan to educate your donors about the effects of the tax law? Do you have any specific marketing efforts in mind?

Bennett: We have always focused our marketing efforts on charitable intent and we will continue to do so. Right now we are in the process of adapting one of our regular mailings to focus on the new tax law. We plan to send out the Sharpe booklet as an insert in one of our mailings.

John: We are starting by educating our staff and volunteers. First of all, Robert F. Sharpe, Jr., will be speaking about the tax law changes at our Planned Giving Roundtable for a number of local United Way organizations. Secondly, we are informing our local United Way organizations to look at the Sharpe web site for details about the tax law. And we may also use the Sharpe tax booklet this fall.

Murphy: I plan to use every opportunity I have to talk with donors, trustees, volunteers, and staff about the new tax law. My staff and I are already scheduled to speak at the Cornell Law School Annual Campaign Kick-Off, our upcoming trustees meeting, and donor events in California. We will also be using the Sharpe tax booklet as a follow-up piece to our next newsletter and sending it out to a broad group of major donors.

Settle: Right now we don’t have any mass mailings planned directly related to the legislation, and I don’t believe emphasizing this law is crucial to our mission. But, if our donors request information on the new law, we will send them some general information and advise them to speak with their attorney or other advisors for more specifics.

Q. Have you already seen any effects from the new tax law?

Bennett: I have not heard much from donors yet, but we have gotten some calls from advisors who wanted to discuss how charitable remainder trusts will be treated differently under the new law.

Murphy: Yes. This July was one of our most active Julys ever. We had 37 trust gifts in that month. But, in August things slowed down because of fluctuations in the stock market and confusion about the tax law. In our experience so far, this confusion has led to some delays of making gifts of appreciated property.

Q. What specific advice would you give to your fellow gift planners in light of the new tax law?

Bennett: Just stick to the basics and market charitably. It may be tempting to market planned gifts by tax benefits, but you’re generally not going to reach the most motivated donors that way. Keep focusing your marketing on your mission and you’ll come out ahead.

John: I think it is important to approach this law from a positive standpoint. Don’t assume that your donors know anything about the law. Explain to them that there are still benefits to charitable giving and encourage them to ask their advisors for more help. Planned giving professionals may also see this as an excellent opportunity to revisit training, review the four-tier structure of income, and brush up on their knowledge of holding periods.

Murphy: Emphasize the positives of the new law. Of course charitable intent is what really drives giving. But lower taxes are nothing but good for charitable organizations since they create more individual wealth. A good economy and declining tax rates encourage giving because individuals have more to give.

Settle: Keep in mind that you’re not the donor’s lawyer. Resist any urge to “play lawyer” when it comes to this revised law. Ask donors, “Have you talked with your attorney, your CPA, and your family about this gift?” Also, don’t forget to carefully proofread all of your marketing materials to make sure they are still valid under the new tax law.

The publisher of Give & Take is not engaged in rendering legal or tax advisory service. For advice and assistance in specific cases, the services of your own counsel should be obtained. Articles in Give & Take may generally be reprinted for distribution to board members and staff of nonprofit institutions and other non-donor groups. Proper credit must be given. Call for details.

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